Kenco Provides Supply Chain Management for Stryker Medical
Kalamazoo, Michigan USA
September 6, 2007
By
Richard Armstrong

Key Personnel:
Kevin Charles, General Manager
Mike Peck, Controller
Bear Priest, General Manager – Warehouse Operations
Judy Craig, Director of Sales

Stryker Medical, a top ten producer of medical devices, hospital furniture and patient handling equipment, utilizes Kenco Logistic Services to handle its supply chain. In North America, Stryker has over one-third of the market for hospital beds, stretchers and other hospital furniture items. Stryker Medical’s logistics is an excellent example of supply chain management by a single third-party logistics provider (3PL).

Kenco’s services for Stryker start with inbound routing and dedicated contract carriage pickups from vendors. Kenco manages inventory for specific vendors moving it to production in a Just-in-Time/Kanban system. Manufactured product is shuttled by Kenco to the warehouse it operates for Stryker. Within the warehouse location, Kenco does transportation planning and execution for outbound shipments. A large part of distribution to hospitals, nursing homes and other Stryker customers, is done by Kenco’s dedicated contract carrier fleet.

Kenco Process Flow Stryker Medical

Most Stryker vendors are located within 200 miles of Kalamazoo.  Key components supplied to Stryker are mattresses, furniture, IV poles, parts and packaging.  Stryker sends order releases to the vendors copying Kenco.  Kenco designs milkruns with a core of regularly scheduled pickups for about one-half of the inbound volume and handles the rest as “special” pickups.  Kenco’s dedicated fleet drivers make the pickups and deliver the merchandise for inventory or staging at the Kalamazoo distribution center or directly to Stryker’s manufacturing plant.  Inbound products stocked at the warehouse are moved to the production line as needed by Kenco shuttle drivers.

Within the warehouse, Kenco maintains a separate sawing operation in which it cuts steel parts for bed frames. This operation runs one shift producing over 50,000 pieces per month. Pieces are shuttled to the production facility as needed.

Finished beds, stretchers and furniture are shuttled to the distribution center where each piece is assigned a specific serial number. This tracking system contributes to tight inventory control (>99%). The distribution center is 251,000 square feet with 14 truck doors. In addition to regular inventory which turns relatively quickly, spare parts are racked at the south end of the distribution center.

For outbound transportation planning, Kenco uses Lean Logistics.  Deliveries are grouped by area and capacities are carefully monitored.  Outbound loads now average 95% capacity – a 20% improvement.  While there are occasional straight loads, most have 5 to 7 stops.  In order to maximize density for trips, Kenco devised a returnable, rolling shipping fixture frame which allows for beds to be shipped in an upright position.  This improvement has increased trailer load density, decreased the warehouse storage footprint of each bed, and will dramatically decrease overall travel distance and labor time in the warehouse related to shipping the units.  Hospital beds and ambulance stretchers are loaded and strapped in trailers.  Furniture is blanket wrapped and normally nose loaded.  All trailers are equipped with lift gates to assist with deliveries.

Most deliveries are to hospitals and nursing homes. These locations are often in older parts of cities. Often, they are short of trailer height dock doors and other amenities. Drivers unload and rearrange cargo as necessary. Stryker insists on quality service. Drivers are uniformed and salesmen often are present at deliveries.

Kenco utilizes 45 drivers with 45 tractors and 90 specialized trailers for distribution. After Lean Logistics is used for load planning, PeopleNet provides drivers route manifests, logging and messaging. Each unit has a global position satellite device.

A typical load we looked at for Florida weighed 19,300 pounds and had six stops. Cube for the load exceeded 90%. The route included 2,105 miles.

Kenco backhauls loads and splits their revenues with Stryker. This activity is part of a total package by which Kenco has lowered Stryker Medical’s supply chain cost for this operation by more than 15%.

The Kenco/Stryker relationship is an excellent example of 3PL lead logistics/supply chain management that has lowered cost and improved customer service.

 

Sources: A&A Primary Research, http://www.kencogroup.com/

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